The Green Sheet Online Edition
December 12, 2008 • 08:12:01
Shifting focus for 2009
It is almost time to say farewell to 2008. For many professionals in the payments industry, it has been a challenging year. Industry veterans will tell you selling to merchants has become an increasingly daunting task. Many factors like a slow economy, market saturation, and the credit crunch and subprime mortgage meltdown have contributed to the many challenges the industry faces today.
I'm sure many ISOs and merchant level salespeople (MLSs) will also agree it's more difficult and challenging to expand and grow businesses at the same levels as previous years. Those who continue to embrace emerging trends and shifting market conditions will ultimately see larger growth and much higher merchant retention than businesses that stand pat.
Diversification in product offerings has always been an important ingredient in the evolution of the ISO business model. The current economic signs point to an overwhelming need in the marketplace for ISOs to offer a diversity of solutions to merchants because merchants are in need of solutions that help them generate more business.
More than ever, merchants seek to implement alternative payment methods. By doing so, merchants lower processing costs for themselves and, at the same time, increase sales, consumer retention and repeat business. So it's not just important for ISOs and MLSs to offer value added solutions; it's also essential that they internalize strategies within payment services to help merchants increase overall profits.
Top challenges
Challenges vary depending on business type, market segment, competition and overall demographics. But most experts would agree that the fundamentals of business point to:
- Increasing business and cash flow
- Building brand awareness through direct mail, e-mail, Web sites and in-store marketing promotions
- Attracting repeat business
- Saving time and resources
- Lowering operating costs
Refocus with value adds
A majority of ISOs and MLSs in our industry focus on helping merchants lower processing costs. But many sales reps do not seek ways to help merchants grow their businesses.
If you are mainly targeting processing, what about the other 90 percent of what makes merchant businesses more successful and efficient? Multiple tools and services can be adapted to help merchants in other areas of their businesses.
Reps who are already targeting multiple sectors of merchant businesses with value added solutions are way ahead of the curve. It's up to every ISO and MLS to find tools that work best for the merchants they service. Investing time and money now to diversify product offerings should be the highest priority of every sales office. Unfortunately, many ISOs and MLSs are focused on quick sales since the core business model has always been credit card processing. Consequently, they have a hard time shifting that focus to new products and services they can offer.
ISOs are not used to focusing on product offerings unless they generate large amounts of upfront cash or substantial residuals. This is understandable. But given the demands on merchants today, ISOs can't expect to retain merchant business and residuals if no additional value is being offered to them. Priorities ISOs and MLSs face many challenges to stay ahead of the pack. Some of the more important challenges are:
- Compensating for lower profit margins and transaction volumes
- Retaining merchants and reducing portfolio loss
- Surviving amid increased competition and market saturation
- Offering new and emerging solutions
- Competing against free equipment offers
- Recruiting and retaining agents and offices
- Analyzing consumer spending
- Recognizing quality third-party vendor solutions
The merchant perspective
Merchants care most about consumer spending and emerging solutions that will help them grow their businesses. MLSs should make it a goal to uncover merchants' long-term objectives. Every merchant is unique; in some respects they all require customized options depending on the type of businesses they operate. It's up to MLSs and their supporting ISOs to perform needs analyses and uncover solutions that help merchants with their bottom lines. Businesses need to constantly evaluate costs, technology, efficiencies and marketing initiatives to stay on top. The same goes for reps.
The alternative option is to continue selling based on cheaper processing rates and free terminal placements. Those strategies are already oversaturated in our industry. However, it may be too painful for certain reps to adapt and implement new products into the mix. This reluctance could be related to lack of:
- Resources to implement new offerings
- Confidence to execute new offerings
- Strategies for successful implementations
- Talent
- Willingness to change
Out with the old, in with the new
The market and competitive landscape will continue to drive diversification. Businesses that refuse to adapt will lose market share. So, with 2009 rapidly approaching, it's a good time for ISOs and MLSs to evaluate their overall product offerings. It's never too late to begin designing new sales strategies. Implementing ones that reach outside the proverbial box could just be the answer.
Competitors will always solicit merchants with enticing offers. But ISOs and MLSs can counter those offers with a new arsenal of solutions available to them. Just read The Green Sheet. But finding the correct balance of solutions to integrate into existing operations will take time and dedication.
Catering to merchants' needs, even if solutions are painful to implement, should remain a top priority. As many reps move to a more robust, bundled selling approach, merchants will recognize and realize more value. Reengineering old-school sales tactics is sometimes a major hurdle for ISOs and MLSs. But with the right support and tools in place, anything is possible.
Remember to keep focused on the solutions that help merchants increase sales and efficiencies. That is the mortar that holds residuals together. Also, tapping into niche markets with bundled solutions will help differentiate your offerings from the competition. Know your target merchants, understand the challenges, make a commitment and take action.
Christian Murray is the Director of Business Development for Global eTelecom Inc. He has more than 12 years' experience within the payments industry. GETI provides check processing and gift and loyalty solutions. For more information, visit www.checktraining.com and www.giftcardtraining.com, or contact Christian directly at 877-454-3835 or cmurray@globaletelecom.com.
Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.
Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.
